Brands Dance With the Stars

Rapper and actor T.I. enjoyed the spoils of the thug life, but it ended up costing him his freedom and, by his own estimate, $12 million in a lost General Motors endorsement deal and other work when he was convicted of federal weapons charges. But the artist, who’s now emerged from prison and has a new record coming out, could be back in the brand partnership game soon.

His label, Warner Music Group’s Atlantic Records, is in active discussion with a number of marketers eager to latch onto his turnaround tale, partly chronicled in an MTV reality series.

“Sometimes, you could be just a couple of hits away from redemption,” says Camille Hackney, Atlantic’s svp brand partnerships and commercial licensing. “Success makes people forget.”

Could it be true that the lure of celebrities, even tarnished ones, outweighs the risk of getting involved with them? At a time when former pitchman extraordinaire Tiger Woods tries to pick up the pieces of his personal and professional life, shouldn’t corporate America run screaming in the opposite direction? Away from the red carpet, that is, and toward something a lot safer than a movie star, singer or pro athlete whose every move and misstep could be fodder for TMZ?

Not quite. True, Woods’ spectacular tumble prompted the loss of lucrative deals with Accenture, AT&T and PepsiCo’s Gatorade while other sponsors, Gillette and Tag Heuer, have distanced themselves in the wake of his extramarital affairs and subsequent hiatus from golf. But Nike and Electronic Arts have stood by Woods, illustrating the continuing appeal of A-list stars, even ones with compromised public images.

In fact, if anything, the use of celeb endorsers seems to be making a comeback. At high-profile advertising events like the Super Bowl, celebrities and popular music appeared in 40 percent of the commercials, according to GreenLight, a licensing, talent and rights consultancy. Celebrity ads spiked 150 percent during the Grammy Awards this year compared to last, GreenLight found.

New deals have also rolled out recently. McDonald’s inked a multiyear partnership with
basketball star LeBron James that featured a commercial in the Super Bowl pregame and will fan out to more ads, personal appearances and myriad other activities. BlackBerry is in the thick of a global sponsorship of the Black Eyed Peas tour, and Olympian Michael Phelps is starring in new Subway commercials, despite the now-infamous bong photo that last year nixed his Kellogg’s cereal endorsement. Atlantic’s Hackney married Grammy-nominated singer Janelle Monae and up-and-coming artists with Coca-Cola’s Happiness Factory campaign this spring after previously brokering deals between Estelle and Crystal Light and Kid Rock and Jim Beam.

Why? Industry experts say the draw of big names is stronger than ever, partially because many stars have used social media outlets like Twitter to establish one-to-one connections with consumers. Plus, there’s still no substitute for a famous face. “As a brand or product, you have about three seconds to grab my attention with your marketing, and nothing helps you do that like a celebrity,” says GreenLight vp David Reeder.  “Marketers haven’t found anything that’s able to elevate the presence of their brands like celebrities. If they had, they would’ve gone there.”

That’s not to say that the Tiger Woods incident has had zero repercussions. There’s a “hangover effect” from the media firestorm around Woods, says Reeder, that’s causing some changes in how marketers approach these arrangements. “It used to be, ‘Here’s a wheelbarrow of cash because you’re so fabulous,’ and there was no expectation of good behavior,” he says. “Celebrities were in the position of strength, and the recourse you had as a brand was so watered down.”

Now, however, the balance of power has shifted, and brands are more circumspect about whom they attach to, how they protect themselves and how they vet the stars. They still realize, of course, that they’re rolling the dice.

Morals clauses, a staple of endorsement deals, are becoming more thorough and specific, contributing to “a bigger, longer, fatter contract,” says Sheryll Kollin, svp, director of business affairs at ad agency Doner.

The paperwork is likely to spell out what constitutes a breach of contract and what will happen if there’s a transgression, where those details were vague or nonexistent in the past.

Morals issues are the centerpiece of a discussion, not an afterthought, Kollin says, though there’s plenty of push back from stars’ agents, managers and lawyers who don’t want phrases like “moral turpitude” included in the language.

“They stand as firm as we do, and we often end up with some sort of compromise,” Kollin says. “But brands have more leverage these days.”

For instance, the wording of a contract may be fine-tuned to say “alleged” instead of “convicted” or could include “behavior that negatively effects the brand,” even though that’s open to interpretation, says David Schwab, vp and managing director of Octagon First Call, a celebrity marketing arm of Interpublic.

“It’s not just legal boilerplate; it’s the heart of the business deal,” Schwab says. “And the marketer is less likely to bend on the fine points.”

Since brands want to mitigate their risk, they’re coming up with a Plan B for their marketing should anything happen with their celebrity endorser. They’re also going for shorter deals. “Brands won’t want to be so tied to one individual. They’re looking for more flexibility,” says Greg Luckman, president of Group M ESP. “Ten-year deals will be few and far between. And one celebrity as the sole face of a company? Not gonna happen.”

To address concerns about return on investment, there’s also more research happening on the front end. In November, Millward Brown, to name one company involved in the process, created a service not unlike eHarmony to figure out the best brand/celeb matches.

The company polls consumers on how they feel about celebrities and tries to gauge such qualities as likability and marketability.

“It’s becoming more of a science and less of an art,” says Millward Brown, evp Graham Kerr. “It used to be about gut feelings. Now brands say, ‘Show me the evidence that this is the right person.’”

Most deals don’t end in scandal, though there have been plenty of headline grabbers in the last few years [see sidebar], two involving domestic abuse allegations. Wrigley and the California Milk Processor Board (the marketer behind the “Got Milk?” advertising) dropped singer/actor Chris Brown as a pitchman after charges emerged that he beat his former girlfriend, pop star Rihanna, and Hanes yanked its Charlie Sheen-centric ads off the air a few months ago when the TV actor was accused of attacking his wife.

“Celebrities have foibles and insecurities and use bad judgement, just like everyone else,” says GreenLight’s Reeder. “Until somebody can come up with the perfect celebrity robot, brands are stuck with human fallibility.”

Some don’t have the stomach for it—considering even a few complaint calls to the consumer hotline too much bad PR—and others take the leap, even though Woods, who seemed infallible, has drawn the spotlight back to celebrities behaving badly.

“Life goes on,” says Millward Brown’s Kerr. “Ninety-nine percent of celebrities do a strong job for their brand partners, and 1 percent goes off the rails.”

Every time there’s controversy over a celebrity endorser, the question comes up about its
impact on the business overall. Eric Kaufman, president of Premier Sports & Entertainment, who’s brokered deals for Laila Ali with Kellogg’s, Subway, Nickelodeon and others, says it’s negligible.

“Right or wrong, people have short-term memories,” he says. “Meanwhile, brands need to compete, grow awareness, increase market share. That’s what celebrity deals can do.”

And though it’s a media-saturated society where paparazzi, Flip cams, cell phones and bloggers are ready to catch stars bathed in an unflattering light, there’s a thriving market for these match-ups.

“It’s clear we live in a celebrity-crazed culture,” Doner’s Kollin says. “Advertisers will never abandon them.”